Saranac & L.P.R. Co. v. Arnold

• Decision Date: 04 June 1901
• Citation: 60 N.E. 647,167 N.Y. 368
• Parties: SARANAC & L. P. R. CO. v. ARNOLD et al.
• Court: New York Court of Appeals Court of Appeals

167 N.Y. 368

60 N.E. 647

SARANAC & L. P. R. CO.

v.ARNOLD et al.

Court of Appeals of New York.

June 4, 1901.

Appeal from supreme court, appellate division, First department.

Action by the Saranac & Lake Placid Railroad Company against Charles E. Arnold and Alfred J. Voyer. From a judgment of the appellate division (58 N. Y. Supp. 710) affirming a judgment in favor of defendants entered on dismissal of the complaint, and an order denying a new trial, plaintiff appeals. Reversed.

This action was brought to recover from the defendants the sum of $23,321.69 upon the allegation that between the 23d of June, 1893, and the 23d of March, 1896, they collected, received, withheld, and retained, for their individual benefit, money and property belonging to the plaintiff worth that amount, and, upon demand duly made, refused to pay over the same or any part thereof. The defendants, by their answers, after some formal admissions, denied the remaining allegations in the complaint. The plaintiff is a domestic railroad corporation organized in 1890, with a capital stock of $100,000, which in 1893 was increased to $250,000. From March, 1893, until March, 1896, the defendant Arnold was president, the defendant Voyer treasurer, and both were directors. The railroad of the plaintiff, consisting of a single track, extends a distance of 10 miles, from Saranac Lake to Lake Placid. It was not built until the spring of 1893, and during the period of construction no one was beneficially interested in the stock except Mr. Arnold, and after it was built he and his codefendant owned substantially all of the stock that had been issued. In March, 1896, the defendants sold a controlling interest in the stock, resigned their offices, and delivered the books and papers to the new officers elected in their stead. In September following this action was commenced, and when tried, in January, 1899, resulted in an order, made at the close of all the evidence, dismissing the complaint, although the plaintiff asked to go to the jury upon several specific questions of fact. The appellate division affirmed the judgment entered accordingly, and the plaintiff appealed to this court.

Parker, C. J., and O'Brien, J., dissenting.

Henry A. Forster, for appellant.

John A. Straley, for respondent A. J. Voyer.

Thomas M. Rowlette, for respondent Charles E. Arnold.

VANN, J. (after stating the facts).

The books of the plaintiff were received in evidence against both defendants, and, as they did not appeal, their objections and exceptions are not before us. We must therefore assume, for the purpose of this appeal, that the books were properly received, and that the plaintiff had a right to rely upon the facts shown thereby. Flora v. Carbean, 38 N. Y. 111;Witmark v. Railroad Co., 149 N. Y. 393, 399,44 N. E. 78. The reason given for the rule in the earlier case cited is that, if the court upon the trial should exclude the evidence, the party offering it could, by his exception, have the ruling reviewed, and he would also have the opportunity to supply the defect by other proof.

We think that the books, supported by the testimony of the bookkeeper who kept them, and the experts who examined them, established a prima facie case against the defendants as to a part of the plaintiff's claim. There appeared upon the journal the following entry: ‘To cash, $3,110, for ties and poles purchased for the Union Electric Ry. Company.’ The bookkeeper testified that both of the defendants told him to make that entry in order to force a balance on the books, and that it was necessary for that purpose. He had no knowledge of any such transaction with the Union Electric Railway Company as was represented by the entry, and the only purpose for making it was that stated. The effect of the entry on the side of the cash account, where it was made, was to reduce the balance of cash on hand. This fictitious entry was not explained, except by the testimony of the defendants themselves, without corroboration from any source.

When the defendants resigned and turned the books over to the new management, the cash account on the ledger had not been ablanced, but when balanced it called for cash on hand to the amount of $2,927.27, although the amount actually turned over to the new officers was but $1.52. The balance, amounting to $2,925.75, was not accounted for upon the books, and therefore was presumptively in the defendants' hands. They were unable to show specifically, by the books or otherwise, where this balance went; but they attempted to account for it, and to meet the other claims of the plaintiff, apparently established against them by the books, by their own testimony, uncorroborated, except, to a slight extent, by the evidence of the bookkeeper. They testified, in substance, that this little railroad did a limited business, and in order to enable it to make money outside of its chartered powers, with the knowledge of...